Contracts Restatement

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Contract

Back 1

A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.

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Promise

Back 2

A manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

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Promisor

Back 3

The person manifesting the promise.

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Promisee

Back 4

The person to whom the manifestation is addressed.

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Beneficary

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Where performance will benefit a person other than the promisee.

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How a promise may be made

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May be stated in words either oral or written, or may be inferred wholly or partly from conduct.

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Terms of promise or agreement

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The portion of the intention or assent manifested which relates to a particular matter.

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Term of Contract

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The portion of the legal relations resulting from the promise or set of promises which relates to a particular matter, whether or not the parties manifest an intention to create those relations.

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Intoxicated Persons (When this invalidates the contract)

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1) He is unable to understand in a reasonable manner the nature and consequences of the transaction; OR

2) He is unable to act in a reasonable manner in relation to the transaction.

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Manifestation of Mutual Assent

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Requires that each party make a promise or begin to render a performance.

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Effect of Misunderstanding (When it invalidates the contract)

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Does not constitute mutual assent to an exchange when the parities attach materially different meanings to their manifestations and:

a) neither party knows or has reason to know the meaning attached by the other; OR

b) each party knows or each party has reason to know the meaning attached by the other.

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Effect of Misunderstanding (When it does no invalidate the contract)

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The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if

a) that party does not know of any different meanings attached by the other, and the other knows the meaning attached by the first party.

b) that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.

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Intention to be Legally Bound

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Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract

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Agreement

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A manifestation of mutual assent on the part of two or more persons

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Bargain

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An agreement to exchange promises or to exchange a promise for a performance or to exchange performances.

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Requirement of Exchange - Consideration

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To constitute consideration,a performance or a return promise must be bargained for. This occurs when a performance or return promise if bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

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What may performance consist of? (consideration context)

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A) An act other than a promise;
B) A forbearance
C) The creation, modification, or destruction of a legal relation.

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Consideration moving from or to a third person.

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It does not matter for whom the consideration moves or to whom it goes. So long as it is bargained for an given in exchange for the promise, the promise is not gratuitous.

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Performance of a Legal Duty

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If this legal duty is already owed to a promisor which is neither doubtful nor the subject of honest dispute, it is not consideration. However, a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.

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Settlement of Claims

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Forbearance to assert or to surrender a claim or defense which proves to be invalid is not typically consideration, unless this forbearance either benefits one party or hurts the other party.

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Exchange of Promise for Promise

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A promise is consideration if and only if the promised performance would be consideration.

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Sealed Contracts

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Eliminate the need for consideration (where there is no statute requiring this) if:
1) it is in writing and sealed; and
2) the document containing the promise is delivered; and
3) the promisor and promisee are named in the document or so described as to be capable of identification when it is delivered.

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Illusory and Alternative Promises (77)

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A promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless:

a) each of the alternative performances would have been consideration alone if it had been bargained for; or
b) one of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would have been consideration.

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Voidable and Unenforceable Promises (78)

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The fact that a rule of law renders a promise voidable or unenforceable does not prevent it from being consideration.

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Adequacy of Consideration; Mutuality of Obligation

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If the requirement of consideration is met, there is no additional requirement of:

a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or
b) equivalence in the values exchanged;
c) mutuality of obligation.